PARIS, France, June 20 – Sportswear giant Adidas on Monday announced a deal worth over Sh 5.7bn ($56.5 million) a year to remain Germany’s kit supplier, doubling the amount it currently pays in the face of competition from Nike.
Adidas’s current contract with the German Football Federation (DFB) to produce the world-renowned white and black jerseys is worth around 25 million euros a year.
With US competitor Nike keen to snatch away the prestigious contract as part of a global football push, German manufacturer Adidas was forced to substantially up the stakes for the new four-year deal which will begin in 2018.
“I can tell you that we made the DFB an offer of over 50 million euros a year and the DFB accepted,” Adidas chief executive Herbert Hainer told a press conference in Paris during the European Championship finals.
“We belong together,” he said.
DFB president Reinhard Grindel said: “They were the clearest, most sophisticated and, in the end, the most economically succesful negotiations in our federation’s history.
“And they produced a very good conclusion.”
Adidas, based in the Bavarian town of Herzogenaurach, has been Germany’s official kit manufacturer for over 60 years and has generally agreed 10-year contracts in the past.
But it faces a constant threat from Nike, which snatched away Adidas’s longstanding partnership with France in 2011.
Nike also sponsors Brazil, England and Portugal and will provide kits for the Swiss national team from 2018 onwards.
Adidas is the world’s leading brand for football apparel and is expected to make around 2.5 billion euros this year.
– Nike assault –
But Oregon-based Nike, which leads the world market across all sports, is increasingly determined to encroach upon its territory.
“We know Nike has made a huge effort on football for several years, concentrating most of its new investment and marketing spend on the sport,” Jean-Pascal Gayant, a French sports economist, told AFP.
“Clearly Adidas is trying to ensure it is not overtaken.”
The new deal was announced on the eve of Germany’s final Euro 2016 group game against Northern Ireland in Paris on Tuesday, when coach Joachim Loew’s side require a point to guarantee a place in the last 16.
Aside from Germany, Adidas has partnerships with globally renowned club sides including Manchester United and Real Madrid.
United’s Premier League rivals Chelsea have bought themselves out of their current deal with Adidas, said to be worth 380 million euros over 10 years, reportedly to enter a new contract with Nike.
The deal with Germany is roughly equivalent to the 60 million euros a year that Bayern Munich receives from Adidas, although the Bavarian club’s contract runs until 2030.
It is some way short of the most lucrative kit deal in the world, the contract that Barcelona has agreed with Nike which is reportedly worth at least 100 million euros a year.
Gayant said he saw no end to the substantially increased shirt contracts.
“As long as football remains a global media phenomenon and there are opportunities for more growth with the next World Cups, I think we will continue to see this kind of inflation,” he said.